Sonae Indústria S.G.P.S — Sonae Indústria — Investor Presentation (February 2016)
46 slides from Sonae Indústria S.G.P.S's investor presentation, February 2016
Slide 1: Investor Presentation
SONAE INDÚSTRIA Investor Presentation February 2016 1
Slide 2: Contents
SONAE INDÚSTRIA Contents 1. Overview 2. Performance 3. Strategy execution 4. Conclusion Appendices 2
Slide 3: Overview
SONAE INDUSTRIA Overview Dasa 3
Slide 4: Highlights
SONAE INDÚSTRIA OVERVIEW Highlights Completed the planned re-dimensioning of industrial footprint and exited from the French market (June 2015) Delivered 7 consecutive quarters of improved LTM Recurrent EBITDA; 107M€ in December 2015 Strategic investments in the amount of 34M€ between 2014- 20
Slide 5: Company with a diversified industrial footprint
SONAE INDÚSTRIA OVERVIEW (as of February 2016) Company with a diversified industrial footprint Sonae SONAE INDÚSTRIA * Installed production capacity (raw boards, thousands m3) Indústria Installed 900* 2290* Production Canada Germany 1 Plant 6 plants Capacity: 5.085 1380* million m3 Portugal and Spai
Slide 6: A top player in each of our markets
SONAE INDÚSTRIA OVERVIEW (as of February 2016) … a top player in each of our markets • Estimated wood based panels production capacity per region ‘000 m3 ‘000 m3 Iberian Peninsula North America SI capacity per product SI capacity per product MDF PB 500 900 PB 880 Considering only PB and MDF producti
Slide 7: … and one of the top 10 world players
SONAE INDÚSTRIA OVERVIEW (as of February 2016) … and one of the top 10 world players TOP 15 world wood based panels players, in terms of production capacity ‘000 m3 • After capacity closures and asset sales of circa 5 million m3, since 2008, Sonae Indústria is still a top 10 player globally SOURCES:
Slide 8: … with world class assets
SONAE INDÚSTRIA OVERVIEW … with world class assets Nettgau Oliv. do Hospital Linares In Germany In Portugal In Spain PB: 650 k m3 PB: 450 k m3 PB: 430 k m3 OSB: 460 k m3 MFC: 20.1 M m2 MFC: 11.1 M m2 MFC: 17.5 M m2 Paper Impregnation Paper Impregnation Year: 2001 Year: 2000* Year: 2001 Lac-Megantic
Slide 9: … and a full range of wood based products
SONAE INDÚSTRIA OVERVIEW … and a full range of wood based products PARTICLEBOARD (PB) Strong range of high value added products • Very versatile • Mainly melamine products, veneer faced, laminates • Suitable for all general uses in furniture and and flooring for decorative solutions construction ind
Slide 10: … generating a diversified revenue mix
SONAE INDÚSTRIA OVERVIEW … generating a diversified revenue mix (2015 sales) • Diversified market base and value added product portfolio • Higher value added products represent more than 50% • Circa 70% of sales generated in Europe Turnover by market | Continued operations Sales by product | Continu
Slide 11: Performance
Performance Performance ® a Dasa
Slide 12: Sustaining turnover through a challenging phase of the market cycle
SONAE INDÚSTRIA PERFORMANCE Sustaining turnover through a challenging phase of the market cycle Turnover and Recurrent EBITDA margin GDP(1) (constant prices, annual percent change) 14.6% 10.4% 9.4% 8.3% 7.9% 7.5% 5.7% 5.5% 3.6% 2012*: Transferring UK values to “discontinued operations”, given the st
Slide 13: Improved operational performance (LTM Recurrent EBITDA)
SONAE INDÚSTRIA PERFORMANCE ... beginning to translate into improved operational performance (LTM Recurrent EBITDA) • Positive EBITDA despite overcapacity, the economic crisis and pressure on wood prices and other variable costs • Operational leverage makes the business well positioned to benefit fr
Slide 14: Positive recurrent EBITDA margin trends post inflection point
SONAE INDÚSTRIA PERFORMANCE … and positive recurrent EBITDA margin trends post inflection point Recurrent EBITDA margin (% Turnover) • Recurrent EBITDA margin of 10.4% in 2015 • Best since 2007 2013 R, 2014 and 2015: Considering France operations, Betanzos and Pontecaldelas plants as “discontinued o
Slide 15: Driven by improved results in all operations
SONAE INDÚSTRIA PERFORMANCE … driven by improved results in all operations LTM 50 Recurrent 45 45 EBITDA 40 37 37 per 35 36 36 region (million euros) 30 28 25 26 22 21 20 15 10 FY13 1Q14 1H14 9M14 FY14 1Q15 1H15 9M15 FY15 Northern Europe Southern Europe Rest of the World Southern Europe: Values for
Slide 16: Higher margins in all operations, y.o.y.
SONAE INDÚSTRIA PERFORMANCE … also with higher margins in all operations, y.o.y. 15.5% Recurrent EBITDA 13.8% margin per Southern Europe region (% Turnover) Northern Europe 8.3% 8.4% Rest of the World 7.7% 6.2% 2014 2015 Southern Europe: Values for “continued operations”. 16
Slide 17: Better average capacity utilization index
SONAE INDÚSTRIA PERFORMANCE … with better average capacity utilization index 85% 83% 82% Average 79% 79% capacity 80% 78% 79% 81% 76% 77% 74% 75% utilization 75% 77% 77% 76% 77% 76% 75% index 75% (%) 70% 71% 71% 65% 60% 55% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 FY14 FY15 Continued operations All o
Slide 18: Reduced fixed costs from streamlining of support costs
SONAE INDÚSTRIA PERFORMANCE … and reduced fixed costs impacted by on-going streamlining of support costs Fixed costs (% Turnover) 18
Slide 19: Net debt slightly increased YoY, but leverage ratio improved
SONAE INDÚSTRIA PERFORMANCE Net debt slightly increased YoY, but the leverage ratio improved +6M€ Net debt and leverage (million euros) 570 5.3x 19
Slide 20: Improved payment profile
SONAE INDÚSTRIA PERFORMANCE … with improved payment profile Scheduled loan repayments* (million euros) 31 December 2014 31 December 2015 Debt 21% structure** Debt Short-term 35% Structure M/L-term 65% 79% *Does not include securitization, factoring and short term facilities. **The MLT debt amount of
Slide 21: Strategy execution
SONAE INDÚSTRIA Strategy execution 21
Slide 22: Restructuring
SONAE INDÚSTRIA STRATEGY EXECUTION | RESTRUCTURING 2014 • Sale of Auxerre and Le Creusot plants • Closure of Pontecaldelas 1H 2015 • Sale of Ussel plant and Betanzos business July 2015 • Sale of Darbo (Linxe plant) 22
Slide 23: Commercial initiatives
SONAE INDÚSTRIA STRATEGY EXECUTION | COMMERCIAL INITIATIVES • Launch of Innovus® Coloured MDF and, more importantly, launch of the new melamine Innovus® 2015 collection. 23
Slide 24: Investments completed: Recycling
SONAE INDÚSTRIA STRATEGY EXECUTION | INVESTMENTS COMPLETED Strategic Investment: Recycling • 12M€ Nettgau investment in recycling facilities 24
Slide 25: Investments completed: Melamine
SONAE INDÚSTRIA STRATEGY EXECUTION | INVESTMENTS COMPLETED Strategic Investment: Melamine • 11M€ Nettgau investment in melamine surfacing Oliveira do Hospital facilities • New EiR® technology in OH Example of a EiR product 25
Slide 26: On-going investments: Melamine
SONAE INDÚSTRIA STRATEGY EXECUTION | ON-GOING INVESTMENTS Strategic Investment: Melamine Lac-Megantic • 11M€ investment in a 5th melamine surfacing line (Canada) • To be completed at the end of the first half of 2016 26
Slide 27: Strategic partnership with Arauco
SONAE INDÚSTRIA STRATEGY EXECUTION | STRATEGIC PARTNERSHIP Announcement of a strategic partnership with Arauco for the European and South African markets • Objective to create a 50/50 joint-venture, involving the existing European and South Africa wood based panels and related operations of Sonae
Slide 28: Strategic partnership: conditions and rationale
SONAE INDÚSTRIA STRATEGY EXECUTION | STRATEGIC PARTNERSHIP • Two strong, reputable and well-established companies in the sector will leverage on the strengths of each one to build a stronger company in the concern markets. • The completion of this agreement is subject to certain legal and internal c
Slide 29: Conclusion
SONAE INDÚSTRIA Conclusion 29
Slide 30: Conclusion
SONAE INDÚSTRIA CONCLUSION Conclusion Significantly improved capital structure Inflection point: cycle turning with high operational leverage Strong market player: geographical and product diversification with world class assets in our major markets Execution delivery: strategic plan with re
Slide 31: Appendices
SONAE INDÚSTRIA Appendices 31
Slide 32: History
SONAE INDÚSTRIA APPENDIX History • Founded in 1959, we have undergone, until 2007, an expansion process through a combination of organic growth and acquisitions • Over the last years we have been through a restructuring process, adapting to the low levels of demand since the 2008-2009 economic and f
Slide 33: Board of Directors
SONAE INDÚSTRIA APPENDIX Board of Directors • Experienced and committed management team Paulo Azevedo (Chairman) Carlos Moreira da Silva (Vice-Chairman) 5 Non Albrecht Ehlers Executive Javier Vega José Romão de Sousa Rui Correia (CEO) 3 Executive Chris Lawrie (CFO) Jan Bergmann (CITO) 33
Slide 34: Shareholding structure
SONAE INDÚSTRIA APPENDIX Shareholding structure • A stable shareholder structure, with a reference shareholder: Efanor, a Portuguese family holding company with other interests in food and non-food retail, shopping centres, telecoms, among other sectors Share capital FREE FLOAT OF Others ~ 812 milli
Slide 35: Competitive Landscape: Iberian Peninsula
GEOGRAPHIC REVIEW OF OPERATIONS| SONAE INDÚSTRIA SOUTHERN EUROPE >> IBERIAN PENINSULA Competitive Landscape Plants 8 Capacity 1.38 Million m3 Sonae Indústria Capacity in Iberian Peninsula thousands m3 Installed Raw Board capacity in Iberian Peninsula | Top Players million m3 35
Slide 36: Competitive Landscape: Germany
GEOGRAPHIC REVIEW OF OPERATIONS| SONAE INDÚSTRIA NORTHERN EUROPE >> GERMANY Competitive Landscape Plants 6 Capacity 2.29 Million m3 Sonae Indústria Capacity in Germany thousands m3 Installed Raw Board capacity in Germany | Top Players million m3 36
Slide 37: Competitive Landscape: Canada
GEOGRAPHIC REVIEW OF OPERATIONS| SONAE INDÚSTRIA REST OF THE WORLD >> CANADA Competitive Landscape Plants 1 Capacity 0.9 Million m3 Sonae Indústria Capacity in Canada thousands m3 Installed Raw Board capacity in North America (PB + MDF) | Top Players million m3 37
Slide 38: Competitive Landscape: South Africa
GEOGRAPHIC REVIEW OF OPERATIONS| SONAE INDÚSTRIA REST OF THE WORLD >> SOUTH AFRICA Competitive Landscape Plants 2 Capacity 0.52 Million m3 Sonae Indústria Capacity in South Africa thousands m3 Installed Raw Board capacity in South Africa | Top Players million m3 38
Slide 39: Sustainable use of wood and recycling
SONAE INDÚSTRIA MORE ON SONAE INDÚSTRIA Sustainable use of wood and recycling • Wood-based panels incorporate a high percentage of sawmill co-products and wood residues as raw materials*: – forestry residues, pallets, old or used wood based panels and old or used furniture • Wood-based panels play a
Slide 40: Higher share of recycled wood
SONAE INDÚSTRIA MORE ON SONAE INDÚSTRIA Higher share of recycled wood • Recycled wood consumption increased by 2 p.p. vs. 2014, mainly due to Nettgau performance 40
Slide 41: CO2 emission mitigation
SONAE INDÚSTRIA MORE ON SONAE INDÚSTRIA CO2 emission mitigation • Wood-based panels help to mitigate climate change*: – Forests are a recognised carbon sink (through photosynthesis); – Forestry products are Carbon Stores; – wood-based panels are actually long-term carbon stores if used in constructi
Slide 42: Sustainable energy sources
SONAE INDÚSTRIA MORE ON SONAE INDÚSTRIA Sustainable energy sources Boards Business Specific energy consumption by type (%) • More than 50% of the energy used is obtained directly from renewable fuels (biomass and other renewable process by- products) * Boards Business: manufacturing units of particl
Slide 43: Management systems - Level of certifications
SONAE INDÚSTRIA MORE ON SONAE INDÚSTRIA Management systems - Level of certifications Quality Environment Energy Forest products chain-of- Health & Safety custody ISO 9001 ISO 14001 ISO 50001 PEFC FSC® OHSAS 18001 Maia Mangualde Oliveira do Hospital Sines Vilela Castelo de Paiva Linares Valladolid Cu
Slide 44: Management systems - Level of certifications
SONAE INDÚSTRIA MORE ON SONAE INDÚSTRIA Management systems - Level of certifications Quality Environment Energy Forest products chain-of- Health & Safety custody ISO 9001 ISO 14001 ISO 50001 PEFC FSC® OHSAS 18001 Meppen Eiweiler Nettgau Horn Beeskow Kaisersesch Panbult White River Lac-Mégantic 44
Slide 45: Glossary
SONAE INDÚSTRIA APPENDIX Glossary Capacity Utilization Index Finished-Available Production (m3) / Installed production capacity (m3); raw boards only CAPEX Investment in Tangible Fixed Assets Earnings Before Interests and Taxes + Depreciations and Amortizations + (Provisions and impairment losses -
Slide 46: Safe Harbour
SONAE INDÚSTRIA SAFE HARBOUR This document may contain forward-looking information and statements, based on management’s current expectations or beliefs. Forward-looking statements are statements that are not historical facts. These forward-looking statement are subject to a number of factors and un
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